In 2020, the government said you could take your own retirement money out early. Up to $20,000 each. Three million Australians did it. They needed the money for rent and food. Now the damage is clear. If you took out $20,000 at age 30, you will have $93,000 less when you retire. That is because the money was not there to grow. The people who withdrew were younger, earned less, and were more likely to be women. The people who could least afford it. There is no government plan to fix this. No backpay. No compensation. The money is just gone.
In March 2020, the Australian government made a decision. It let people pull their own retirement savings out early. Up to $20,000 per person. No tax. No questions about what the money was for. Just log into myGov and click.
Three point zero five million Australians did exactly that. They pulled out roughly $36 billion from their super funds across two tranches: April to June 2020, and July to December 2020 (Source: ATO, 2020). At the time, it felt like survival. Rent was due. Jobs were gone. Centrelink had a six-week queue. The money was sitting right there in a super account. The government said take it. So people did.
Six years later, the full cost is becoming visible. And nobody in Canberra wants to talk about it.
How it worked
The COVID Early Release Scheme was simple. If you were financially affected by the pandemic, and that covered just about everyone during lockdowns, you could apply through myGov to withdraw up to $10,000 in the 2019-20 financial year and another $10,000 in 2020-21. The ATO approved applications automatically in most cases. The money landed in bank accounts within days.
There was no means test. No requirement to prove hardship beyond ticking a box. No cap on how many times you could apply across the two tranches. The process was designed for speed, not for protecting the people using it.
And it worked. Too well. In the first tranche alone, Australians withdrew $29 billion. The second tranche pulled another $7 billion through July 2020 (Source: APRA, 2020). Super funds had to sell assets to meet the demand. Some funds delayed processing. APRA later confirmed the withdrawals stressed fund liquidity, particularly in the first weeks when applications flooded in faster than funds could liquidate holdings (Source: RBA, 2021).
Who took the money
The profile of who withdrew tells you everything about who got hit hardest by the pandemic.
They were young. Under 35s accounted for the majority of withdrawals. They had the lowest super balances to begin with. A $10,000 withdrawal from a $15,000 balance is not a dip into savings. It is wiping out two-thirds of someone’s retirement fund.
They were low-income. The average withdrawal was not the full $20,000. It was around $8,000 per person per tranche. These were not wealthy people topping up their investment portfolios. These were casual workers, hospitality staff, gig economy drivers. People who lost shifts overnight and had no buffer.
They were women. Women were over-represented among those who withdrew, consistent with the gender super gap that was already there. Women retire with about 25% less super than men. The early release scheme made that gap wider.
And the money went to real things. Rent. Groceries. Utility bills. Mortgage payments. This was not a spending spree. The Reserve Bank’s own analysis confirmed that the vast majority of withdrawn funds went to household consumption and debt repayment. People were surviving, not splurging.
The $93,000 mistake you did not know you were making
Here is the part that nobody explained clearly enough at the time.
Take $20,000 out of super at age 30. That money, left alone in a balanced fund earning roughly 7% per year, would have grown to about $152,000 by age 60. Take it out and it grows to zero. The gap is not $20,000. It is $132,000 in lost compounding.
Morningstar put the number at $93,000 for a typical withdrawal scenario, accounting for fees and varied returns (Source: Morningstar, 2025). Either way, the figure is enormous. And nobody was forced to read that calculation before clicking “withdraw” on myGov.
The government’s own Retirement Income Review, completed in 2020, had warned about the dangers of early access. The review found that even small reductions in super balances early in a working life produce large reductions in retirement outcomes due to compounding. The warning existed. The scheme went ahead anyway.
Now multiply that across 3.05 million people. The aggregate damage to Australia’s retirement savings pool runs into tens of billions of dollars. Not in today’s money. In future money. In the money those workers will not have when they are 65 and the ASFA comfortable standard requires $630,000 for a single person (Source: ASFA, 2026).
The political calculation
The government solved a crisis by letting people spend their own future. No new taxes. No new debt. Just open the gate and let three million people drain their own retirement accounts.
The Morrison government was not blind to the risks. The decision to allow early access was a trade-off. Short-term economic survival versus long-term retirement outcomes. In a crisis, short-term always wins.
But there was also a political dimension. Getting cash into bank accounts fast was good politics. It bought goodwill. It looked like action. The fact that the cash came from workers’ own retirement savings, not from government spending, made it fiscally cheap. The budget impact was minimal because the money was never the government’s to begin with.
That is the quiet part. The government solved a crisis by letting people spend their own future. No new taxes. No new debt. No parliamentary battle over stimulus spending. Just open the gate and let three million people drain their own retirement accounts.
What happened after
The scheme closed on December 31, 2020. Life moved on. The economy recovered. Lockdowns ended. JobKeeper wound down. Super balances rebuilt slowly for those who kept working.
But for those who withdrew, the money is gone. And with it, decades of compounding returns that money would have earned.
There has been no government programme to replace the withdrawn funds. No super top-up scheme. No tax credit for affected workers. No acknowledgment that the policy created a generational retirement gap. The 2025-26 budget contained no measure addressing early release losses. The 2024-25 budget did not either.
The ATO published data on who withdrew and how much. Researchers at APRA and the RBA documented the liquidity stress on funds. Academics studied the demographics. Everyone measured the wound. Nobody proposed a bandage.
The people who could least afford it
This is what makes the early release scheme different from other policy decisions. The people it hurt most were the people who had the least to begin with.
A 60-year-old executive with $800,000 in super who withdrew $20,000 lost 2.5% of their balance. Annoying, but survivable. A 25-year-old hospitality worker with $12,000 in super who withdrew $10,000 lost 83% of their retirement savings. The proportional damage was brutal, and it landed hardest on the young, the casual, the low-paid.
Women, already starting from behind due to the gender super gap, fell further behind. Young workers, already facing a housing affordability crisis and stagnant wages, lost the one forced savings mechanism that was actually working for them.
The super system was built on a single principle: preservation. Money goes in, it stays in, it compounds for decades, you get it at retirement. The early release scheme broke that principle for three million people during the worst economic shock in a generation. The principle was already under pressure from the First Home Super Saver Scheme and other access mechanisms. COVID made the breach massive.
No fix coming
Payday Super arrives in July 2026. It will help stop unpaid super going forward. The SG rate is now 12%. Super on paid parental leave started in July 2025. These are real improvements.
But none of them address the $36 billion that walked out the door in 2020. That money is gone. The compounding returns it would have generated are gone. The retirement gap it created is permanent unless something changes.
Nothing is changing. The government has moved on. The opposition has not mentioned it. The super industry has not pushed for a remediation scheme. Three million Australians are walking toward retirement with less money than they should have, because a government told them it was okay to spend their own future.
That is the bill. It arrives at retirement. And the people who will pay it are the same people who could least afford it in the first place.
Sources
- COVID-19 Early release of super - Australian Taxation Office
- The superannuation Early Release Scheme: Insights from APRA’s pandemic data collection - APRA
- Why are Aussies draining their super early? - Morningstar Australia, November 2025
- Accessed your super early? Experts on if you should pay it back - ABC News, March 2025
- What Did 2020 Reveal About Liquidity Challenges Facing Superannuation Funds? - Reserve Bank of Australia, April 2021
- ASFA Retirement Standard: Super balances needed for comfortable retirement reach all time high - ASFA, February 2026
- Allowing early access to retirement savings: Lessons from Australia - National Library of Medicine, 2022
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